You might have heard the term joint tenants with rights of survivorship, but do you really know what this means? People might have even recommended that you own property as joint tenants with rights of survivorship with your spouse or another person. But is this a good idea? What are the rights of survivorship and do you really want to hand them over to someone else?
Here is your complete guide to joint tenancy with right of survivorship, including the JTWROS meaning, advantages of joint tenancy, disadvantages of joint tenancy with rights of survivorship, and the details you need to know before making any changes to your property ownership.
What Is Joint Tenancy?
According to Cornell Law School, the joint tenancy definition is: A type of co-ownership of property. As joint tenants, each owner has an undivided interest in the property.
When discussing financial accounts held as joint tenants, each joint owner generally has the same rights to deposit, withdraw, and use funds in the account, regardless of who initially deposited them. When discussing real property, each owner has the full right to occupy and use the property.
Joint tenancy is a term often associated with real property (like a house), but it can also apply to other types of assets, such as financial accounts. It is a form of co-tenancy, which is a term used to describe how people own a piece of property together. But it is not the only form of co-tenancy or joint ownership of property.
Joint tenancy can refer to ownership by two or more people. Each co-owner has an equal interest in property they purchase, including the benefits and the financial obligation. It is also important to note that each owner does not own a percentage of the property. For example, if there are two owners, that does not mean each owns 50%. If there are four owners, that does not mean each owns 25%. Instead, you can think of each owner as owning 100% of the property.
What Is Joint Tenancy with Right of Survivorship?
Now that you know what joint tenancy is, your next question might be: what is the right of survivorship? The right of survivorship means that when one owner of the property dies, the surviving owner absorbs their interest in the property.
Suppose a couple, Mary and Jane, are joint tenants with right of survivorship of a home. They live in the property together for ten years. They both pay on the mortgage and use the home as they see fit. Mary dies. Jane now owns the house alone because she has absorbed Mary’s share. The owners have a joint right of survivorship, so the same thing would happen if Jane died first, in which case, Mary would become the sole owner.
The right of survivorship is automatic. The remaining joint owner or owners do not have to go to court to receive their share of the property. Probate is not necessary (which is one of the advantages of joint tenants with rights of survivorship). However, there might be a need to retitle the property to avoid confusion with court records, which the surviving joint tenant can do after the other owner dies.
Joint tenancy with rights of survivorship trumps any contrary instructions in a will. For example, if a co-owner said in their will that their children would inherit their share in the property, this provision would have no power because the deed itself says the remaining co-owners would receive the owner’s interest at the time of their death.
What Is the Difference Between Joint Tenancy and Joint Tenancy with Right of Survivorship?
Joint tenancy generally conveys a right of survivorship to the other co-owners. Therefore, there is no real difference between joint tenancy and joint tenancy with right of survivorship. However, state law may dictate that property deeds or titles include certain magical terms that convey significant legal meaning.
In some states, if the term “joint tenancy” is used, it is automatically assumed to mean tenants in common, another type of co-ownership that does not convey the right of survivorship. When the term joint tenant with right of survivorship is used, this demonstrates the co-owners intent to divest their share in the property at the time of their death to the remaining co-owners.
Very clear language is often recommended to avoid confusion. For example, the deed or title may state “Mr. John Doe and Ms. Jane Doe are to be designated joint tenants with rights of survivorship, and not as tenants in common.”
Requirements for Joint Tenancy
To establish a JTWROS, the co-owners must meet these four requirements, which are sometimes referred to as the “four unities”:
- The owners acquire the asset at the same time
- The owners have the same title on the asset
- The owners have an equal share in the property (regardless if they paid different amounts for their share in the property)
- The owners have the same right to possess the property
A joint tenancy with rights of survivorship cannot be created if any of these requirements are not met.
Who Can Be Joint Tenants?
Joint tenancy with rights of survivorship is usually used between married couples or between a parent and their adult child. However, this is not a legal requirement to create a valid joint tenancy (the only legal requirements are listed above).
Any consenting adults are generally free to enter into a joint tenancy, which may include:
- Married couples
- Unmarried couples
- Cohabiting couples
- Same-sex couples
- Domestic partners
- Family members
- Close friends
- Business partners
- Investment partners who do not know each other
What Types of Property Can Joint Tenants Own?
Joint tenants can own a variety of property in this manner, including:
- A marital home
- Investment property
- Vacation homes
- Businesses
- Personal property
- Checking accounts
- Savings accounts
- Mutual funds
- Brokerage accounts
Is Joint Tenancy Right for You?
Whether joint tenancy is right for you depends on your particular situation. Here are some pros and cons of joint tenancy.
Pros of Joint Tenancy
Here are some of the advantages afforded by joint tenancy:
- Shared Costs
Joint tenancy is often used to purchase real estate. For many people, this is the largest purchase of their lives – and possibly one that they cannot afford without the help of others. In a JTWROS situation, all co-owners can contribute to the property equally, so they can all contribute to:
- Bills
- Property taxes
- Mortgage payments
- Maintenance
- Repairs
This arrangement can split the financial burden between two or more people, thereby decreasing individual financial burdens.
- Probate Avoidance
Joint tenancy with right of survivorship can be an effective way to avoid probate. Probate is the legal process to distribute your assets according to the terms of your last will and testament or state intestacy laws, but probate is often time-consuming and expensive. When an owner has a JTWROS for their home, they no longer own the real property at the time of their death because the right of survivorship gives their share to the remaining co-owners. This can effectively remove the most valuable asset from the estate, which may make the estate eligible for small estate administration.
- Rights of Survivorship
The rights of survivorship can be particularly helpful when difficult family situations are involved. For example, if property passes through probate, a disgruntled heir or family member may question whether the gift was freely given. With the right of survivorship, the owner’s interest in the property automatically passes to the surviving co-owner, so they do not have to be exposed to potential legal challenges regarding their rights.
This arrangement can help ensure that the property goes to your intended beneficiary. Your heirs have no claim to the property. The remaining owners can continue to use the asset as they see fit without having their ownership rights interfered with. For example, your partner could continue living in a residence that was owned as JTWROS or your business partner could continue using the business bank account you owned as joint tenants.
Cons of Joint Tenancy
There are also some drawbacks you should be aware of before entering into a joint tenancy arrangement, including:
- Unanimous Consent Required
Typically, no one in a joint tenancy can make unilateral decisions regarding the property. To get a loan against the property or to sell it, all co-owners must agree and give their permission. This can make the situation difficult if different owners have different wishes for the property.
- Vulnerability to Creditors
If a co-owner has creditor issues like outstanding debts, a lawsuit is filed against them, or a judgment has been made against them, the creditor may be able to seize an interest in the co-owned property.
- Potential Relationship Issues
If two or more people co-own property, it can be difficult for them to untangle themselves from the arrangement if the relationship changes, such as a couple divorces or breaks up.
- No Choice in Beneficiaries
Once you own property as JTWROS, you give up the right to pass that property to your heirs (unless you are the last living joint tenant).
- Impact by Others’ Actions
Co-owners can negatively affect you and your ownership interest if they do not make their equal financial contribution to the property, such as paying for repairs or making mortgage payments.
- Lack of Control
Once you agree to a JTWROS arrangement, you may give up your right to control the asset. For example, some people title their checking accounts with one of their adult children, thinking that the child will distribute the funds in the account between all of the children equally. However, once the child is listed as a joint tenant, they are a complete owner and can use the asset or account as they see fit.
- Government Benefit Eligibility
Some people use JTWROS accounts or arrangements as a quick, cheap, and easy way to make an estate plan. For example, it may be simpler to list another person on a financial account as an owner than to create a power of attorney. However, adding someone else to an account or entering into a deed with a co-owner can reduce your interest in the property and may be seen as transferring property for less than fair market value, which can affect your eligibility for government benefits like SSI or Medicaid.
Other Ways to Co-Own Property
There are other ways to co-own property besides as joint tenants with rights of survivorship. Here are a few of the most common alternatives to JTWROS and how they differ.
Joint Tenants with Rights of Survivorship vs Tenants in Common
Tenants in common is a less restrictive way to co-own property than as joint tenants with rights of survivorship. Some of the differences in these two arrangements include:
| Tenancy in Common | Joint Tenancy | |
| Creation | Ownership arrangement can be made at any time | Joint tenants must enter into the ownership at the same time |
| Percentage interest | Owners can hold a different percentage of interest in the property | Each owner has an equal stake and interest in the property |
| Inheritance | Can pass on to beneficiaries of choice (if will) or to heirs (if not will) | Co-owners inherit their share |
| Termination | Can buy out the other owner or sell their share in the asset | All co-owners may have to agree or the JTWROS may be severed if one co-owner sells their interest |
Joint Tenants with Right of Survivorship vs Tenants by the Entirety
Tenants by the entirety is another way to co-own property with someone. However, it is specifically only for married couples and is not recognized in all states. It grants spouses the same rights as a JTWROS, including the right of survivorship, an undivided equal interest in the property, and full rights to occupy and use the property. However, an added benefit is that a creditor cannot enforce a lien on the property held in this manner if only one spouse owns the debt.
Other Options
There may be another form of ownership that makes sense for your particular situation. For example, if you live in a community property state, ownership of the property may already be assumed to be 50/50 per community property rules. If a spouse dies, the surviving spouse will own the jointly owned property outright.
It is also possible to co-own property as part of a revocable trust agreement. Property held in revocable trusts offer several advantages, including:
- The trust creator can make changes or revoke the trust during their lifetime, which can be helpful if relationship or decisions change
- The trust creator can impose additional responsibilities and grant certain rights related to the property
- The property can avoid the probate process
Another option may be to provide a limited property interest to a person. For example, a life estate can give someone the legal right to occupy the property. This arrangement might be made for loved ones, such as parents or children you want to ensure have a safe place to live but who do not wish to grant a greater interest in the property. After the person with the life estate dies, the other owners still own the property and the property title is intact.
Takeaway
Property that is owned as joint tenants with the right of survivorship may be the most valuable property you own. Joint tenancy can offer several benefits, including the ability to avoid probate and being able to pass on property to co-owners in a simple manner. However, joint tenancy does pose some risks, such as losing control over the property and being vulnerable to co-owner’s creditors, that should be carefully considered before entering into this arrangement.